The purpose of this chapter is to establish consistent standards for the acceptance of security to insure the completion of improvements associated with development and to insure warranty for the improvements completed. This chapter should be liberally construed. It is the intent of the city to exercise the maximum authority allowed under state law to protect the citizens of the city and to hold development accountable for the timely completion and maintenance of improvements.
(Ord. 2852 § 10 (Exh. A), 2011)
Whether in the form of a bond, irrevocable letter of credit, or assignment of cash deposit, the undertaking for performance shall contain the following provisions:
(1) 
A stated amount calculated in accordance with the requirements of this chapter;
(2) 
A detailed description of the improvements to be completed and the deadline by which completion must occur;
(3) 
A provision reading as follows:
The security for performance is obligated, bound and guarantees completion of the work by the deadline. If the work is not fully completed by the deadline to City standards, then the party bound shall within thirty days of demand from the City make a written commitment to the City that it will either:
(a) Remedy the default itself with reasonable diligence pursuant to a time schedule acceptable to the City; or
(b) Tender to the City within an additional fifteen (15) days the amount necessary, as determined in good faith by the City, for the City to remedy the default, up to the total amount of the security. Said estimate shall include reasonable City administrative overhead costs, legal costs and attorneys fees.
Upon completion of the duties of the surety or party bound under either of the options above, the party bound shall then have fulfilled its obligations under the security for performance. If the party bound elects to fulfill its obligation pursuant to the requirements of subsection (3)(b) of this section, the city shall notify the party bound of the actual costs of the remedy, upon completion of the work. The city shall return, without interest, any overpayment made by the party bound, and the party bound shall pay to the city any actual costs exceeding the city's estimate, limited to the amount of the security for performance.
The security for performance shall extend to all of the city's administrative overhead costs and to all legal costs and reasonable attorneys' fees incurred in seeking performance by the principal and any other obligated or bound party to the maximum value or penal sum of the security.
Any security for performance received by the city after the effective date of the ordinance codified in this chapter shall be construed to contain the terms of subsections (1), (2) and (3) of this section, whether the said provisions are expressly set out or not.
(Ord. 2852 § 10 (Exh. A), 2011)
Whether in the form of a bond, irrevocable letter of credit, or assignment of cash deposit, the undertaking for maintenance shall contain the following provisions:
(1) 
A stated amount calculated in accordance with the requirements of this chapter;
(2) 
A detailed description of the warranty, maintenance to be performed, and any monitoring and reporting requirements, and the duration of each;
(3) 
A provision reading as follows:
The security for maintenance is obligated and bound to warrant, monitor, report, and maintain the improvements for the stated duration. If City shall grant acceptance of some improvements but not all improvements at the same time, the security for maintenance shall become effective as to each improvement as and when that improvement is accepted and shall remain in effect for the stated duration for each improvement from the date of its acceptance. If required monitoring, reporting, maintaining and repair and replacement in accordance with warranty does not occur in accordance with City standards, then the surety or party bound shall within thirty (30) days of demand from the City, make a written commitment to the City that it will either:
(a) Remedy the default itself with reasonable diligence pursuant to a time schedule acceptable to the City; or
(b) Tender to the City within an additional fifteen (15) days the amount necessary, as determined in good faith by the City, for the City to remedy the default, up to the total amount of the security. Said estimate shall include reasonable City administrative overhead costs, legal costs and attorneys fees.
Upon completion of the duties of the surety or party bound under either of the options above, the party bound shall then have fulfilled its obligations under the security for maintenance. If the party bound elects to fulfill its obligation pursuant to the requirements of subsection (3)(b) of this section, the city shall notify the party bound of the actual costs of the remedy, upon completion of the work. The city shall return, without interest, any overpayment made by the party bound, and the party bound shall pay to the city any actual costs exceeding the city's estimate, limited to the amount of the security for maintenance.
The security for maintenance shall extend to all of the city's administrative overhead costs and to all legal costs and reasonable attorneys' fees incurred in seeking performance by the principal and any other obligated or bound party to the maximum value or penal sum of the security.
Any security for maintenance received by the city after the effective date of the ordinance codified in this chapter shall be construed to contain the terms of subsections (1), (2) and (3) of this section, whether the said provisions are expressly set out or not.
(Ord. 2852 § 10 (Exh. A), 2011)
The amount of the security, either for performance or maintenance, subject to adjustment under MMC § 22G.040.050, shall be calculated as follows:
(1) 
Security for Performance. The principal amount of the security, whether in the form of a bond, irrevocable letter of credit, or assignment of cash deposit, shall be calculated as follows:
Amount equals current fair market cost for performance adjusted for inflation for term of obligation, multiplied by 1.5 to reflect city's cost if it must perform under competitive bidding and prevailing wage, plus 30 percent of the current fair market cost for performance as city's administrative overhead costs and anticipated legal costs and reasonable attorneys' fees, provided the total amount for administrative costs and anticipated legal costs and reasonable attorneys' fees shall not exceed $100,000.
(2) 
Security for Maintenance. The principal amount of the security, whether in the form of a bond, irrevocable letter of credit, or assignment of cash deposit, shall be calculated as follows:
Amount equals 10 percent of the fair market value of the improvement, with a minimum amount being $5,000, plus 30 percent of the amount calculated for security for maintenance as city's administrative overhead costs and anticipated legal costs and reasonable attorneys' fees, provided the total amount for administrative costs and anticipated legal costs and reasonable attorneys' fees shall not exceed $100,000.
(3) 
Anticipated Legal Costs and Reasonable Attorneys' Fees. Anticipated legal costs and reasonable attorneys' fees are those city costs incurred for securing compliance or collecting funds and any other legal costs incurred through the completion of the work.
(4) 
Administrative Overhead Costs. Administrative overhead costs are those internal costs incurred for staff time in observing the condition of improvements or maintenance, and taking action to secure compliance, together with costs incurred to consultants to observe, monitor and report concerning work or maintenance.
(Ord. 2852 § 10 (Exh. A), 2011)
Notwithstanding the calculation of the amount of the security under MMC § 22G.040.040, the city shall have the authority to modify the amount of obligation to reflect the city's experience and history in obtaining performance or required maintenance with the type of security offered, bond, irrevocable letter of credit, or assignment of cash deposit. If the city's experience and history would require an increase in the amount of the obligation by more than an additional 25 percent, the city shall refuse the security offered. Should the security once received not provide adequate assurance of performance due to changed circumstances, including increased cost of performance, the city through the community development director may require that the amount of security for performance or maintenance be increased to reflect then fair market costs of performance.
(Ord. 2852 § 10 (Exh. A), 2011)
All legal actions to enforce either security for performance or maintenance may be brought in the Superior Court of Washington with venue in Snohomish County. The city shall be entitled to an award of legal costs and reasonable attorneys' fees in any such proceedings against the principal and against the surety to the maximum penal sum of the security held.
(Ord. 2852 § 10 (Exh. A), 2011)
Upon full and timely performance of the work, and/or full and timely performance of maintenance, monitoring, reporting, repair or replacement, the city shall release its security for performance and/or security for maintenance, as the case may be.
(Ord. 2852 § 10 (Exh. A), 2011)
The city reserves the right to refuse security for performance and to require that performance of work as a condition of approval be completed prior to final acceptance.
(Ord. 2852 § 10 (Exh. A), 2011)